It is time to start storing up nuts for the winter. That seems to be the message the major credit-rating agencies are delivering to state leaders.

California is among the 10 states with the most tax-supported debt outstanding. S&P Global Ratings, a division of Standard & Poor’s Financial Services, put these states to a fiscal stress test to see how they would weather a moderate recession.

California was not among the worst of the worst, but ranked at the low end of the middle group, in which budget returns “are insufficient to fully cover the revenue shortfall in our stress scenario but equal at least 50 percent of the potential gap,” S&P said.

California barely met this threshold, with reserves covering 57.4 percent of the expected deficit in the first year of the simulated recession.

“In our simulation, general fund tax revenue would fall short of what the enacted budget assumes by $14.7 billion during the first year of a recession,” S&P reported. This is based on a 12.3 percent expected revenue miss, the largest of all the states examined.

The S&P report echoes the findings of a Moody’s Investors Service report published in April, in which the rival credit-rating agency found that California is the worst-prepared for a recession among the nation’s largest states “due to its revenue volatility, weak financial flexibility and lower reserve levels.”

“California is susceptible to boom-and-budget budgetary cycles, a byproduct, in our view, of its simultaneously high incomes, progressive income tax regime and above-average poverty rate,” S&P said. As evidence of the extreme progressivity of the state’s personal income tax structure, S&P noted that the top 1 percent of earners paid 48 percent of all income taxes in 2014.

The news was not all bad, however. S&P gave California credit for paying down some of its debts, such as the “wall of debt” identified by Gov. Jerry Brown, noting that the state is “in a better position to weather the first-year effects of a recession than it has been in recent memory.”

But it also hinted at the state’s long-term troubles with its pension obligations.

“Already, California’s fiscal position is subject to above-average sensitivity to financial markets through their effect on capital gains income and personal income tax revenue,” the report said. “State pension funding arrangements that produce higher contribution requirements following underperforming investment returns and — relatedly, general fund tax revenues — accentuates the relationship.”

This is compounded by the fact that when the dot-com bubble popped in 2000, the California Public Employees’ Retirement System and California State Teachers’ Retirement System were both more than fully funded; now they are starting from a position where they are roughly only about 70 percent funded.

Multiple credit-rating agencies are now saying what budget reformers have been warning us about for years: California needs to get its fiscal house in order. It must more rapidly build up its reserves, pay down its debt and put an end to its spending addiction.

Will it take another severe recession before the ruling Democratic legislators in Sacramento start to listen?

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